) reported second-quarter 2014 earnings of 48 cents per American
Depository Receipt (ADR), higher than the year-ago earnings of 44
In the reported quarter, revenues increased 6% to $3.9 billion
year over year. The top-line was mainly driven by strong sales of
Victoza and Levemir.
All growth rates mentioned below are on a year-over-year and
local currency basis.
The Quarter in Detail
Total revenue grew 7% in local currency driven by sales growth
in North America (up 11%), international Operations (up 10%) and
China (17%). Geographically, North America was the largest
contributor to total revenue.
Novo Nordisk's diabetes care segment recorded sales growth of
8%. Modern insulin generated strong revenues (up 14%) driven by
NovoRapid (up 4%), NovoMix (up 7%) and Levemir (33%). Novo
Nordisk's key drug, Victoza, witnessed sales growth of 11%,
primarily due to higher demand in North America, international
operations and China.
Sales in the biopharmaceuticals segment increased 1%.
Norditropin's sales were up 7%, partially offset by fall in
NovoSeven's sales by 5%. Other products witnessed 8% sales
Research and development (R&D) expenses increased 15% due to
pipeline development. Administration costs were up 1%. Sales and
distribution costs remained flat year over year.
Novo Nordisk is working on strengthening its pipeline. The
cardiovascular outcomes study (DEVOTE) on Tresiba is progressing
ahead of plans and patient enrolment should be completed within the
next six months. Novo Nordisk expects sufficient data from the
study by the first half of 2015 to support an interim analysis and
intends to file a new drug application (NDA) in the U.S. during
this period. The company expects to complete the study within three
to four years from initiation.
Meanwhile, the company initiated the fourth study (SUSTAIN 4)
under a phase IIIa program (SUSTAIN) on semaglutide (one-weekly
GLP-1 analog) for the treatment of type II diabetes. Novo Nordisk
intends to initiate the last study (SUSTAIN 5) in the program, by
We remind investors that Xultophy is under review in Europe for
type II diabetes in combination with glucose-lowering oral drugs,
when such drugs (alone or combined with basal insulin) fail to
achieve adequate glycemic control. A response from the EC is
expected by Oct 2014. On approval, Novo Nordisk intends to launch
Xultophy in Europe in the first half of 2015.
Additionally, Victoza (liraglutide 3 mg) is under FDA review for
the treatment of adults suffering from obesity (with or without
comorbidities) and overweight adults with comorbidities such as
hypertension, dyslipidemia, sleep apnea or type II diabetes. The
FDA's Advisory Committee will discuss the NDA for Victoza on Sep
11, 2014 (tentative date).
2014 Outlook Maintained
Novo Nordisk continues to expect sales growth in the range of
7%−10%. The outlook is based on expectations of strong performance
by Victoza, modern insulin and modest Tresiba sales, to be partly
offset by generic competition to Prandin in the U.S., increased
competition for diabetes and biopharmaceuticals products in
international operations and adverse effects of rebate and
contracts in the U.S.
Novo Nordisk maintained its guidance for operating profit growth
around 10% in local currencies.
Although Victoza and Levemir performed satisfactorily, generic
competition for Prandin, loss due to Medicare facilities and
rebates in the U.S. made it a tough task for the company to sustain
revenue growth. Novo Nordisk has a number of regulatory events
lined up for 2014. We expect the latter half of 2014 to be catalyst
rich for the company. We expect investor focus to remain on
regulatory updates from the diabetes care segment of Novo
Novo Nordisk carries a Zacks Rank #4 (Sell). Some better-ranked
stocks in the health care sector are Allergan Inc. (
), AstraZeneca plc (
) and Salix Pharmaceuticals Ltd. (
). While Allergan carries a Zacks Rank #1 (Strong Buy), AstraZeneca
and Salix Pharmaceuticals hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
ASTRAZENECA PLC (AZN): Free Stock Analysis
ALLERGAN INC (AGN): Free Stock Analysis Report
NOVO-NORDISK AS (NVO): Free Stock Analysis
SALIX PHARM-LTD (SLXP): Free Stock Analysis
To read this article on Zacks.com click here.